The FCC has announced that Sprint and Verizon have agreed to pay $158 million in order to settle long-standing charges that the carriers fraudulently charged customers for third-party services, known as ‘cramming’ and was once a frequent complaint of both wireless and wireline sales.
According to the charges, the monthly charges for third-party premium text messaging services ranged from $0.99 to $14.00, but were typically $9.99 per month. Verizon retained 30% or more of each third-party charge that it billed, while Sprint received approximately 35% of collected revenues for each of its third-party charges.
Sprint will pay a total of $68 million in penalties, with $50 million going back to customers, $14 million will go to state governments, and $2 million will go to the federal government. Verizon will pay penalties of $90 million, with $70 million going back to customers, $16 million to states, and $4 million to the government.
Sprint and Verizon also agreed to other enforcement actions, such as no longer being allowed to offer premium SMS services. For all other third-party services, they must now obtain clear consent before initiating charges, clearly mark charges on monthly bills, and make it easier for customers to block third-party services in the future.